ECONOMYNEXT – Proparcothe private sector arm of the French development lender French Development Agencyis ready to look at financing firms in Sri Lanka as the country has emerged from default and is stable, an official said.
Sri Lanka defaulted on its external debt in 2022 and has now completed the restructuring of its sovereign bonds, and most of its bilateral debt including those of the AFD itself.
Bilateral lenders stopped lending to Sri Lanka and only provided grants during the time of default, while multilaterals’ whose debt continued to be serviced, funded the island.
“It was not so easy at that time,” Reza Hassam Daya, Global Head of Manufacturing, Agribusiness and Services at Proparco told EconomyNext.
“But now, I think we are very open to seeing some projects.”
Sri Lanka’s credit rating has now been upgraded to CCC+ from selective default. Standard and Poor’s which kept its rating at selective default pending the restructure of a sovereign guaranteed bond issued by the national carrier also upgraded the rating last Friday.
Proparco had funded Sri Lanka’s Commercial Bank of Ceylon and Hatton National Bank to on-lend to smaller firms in Sri Lanka just before Covid hit the island.
Proparco is 85 percent owned by the French development finance institution Agence Française de Développement (AFD) and a group of private and multilateral lenders.
The agency finances private firms with the objective of helping countries reach sustainable development goals, protecting the planet and reducing inequality.
Though Proparco assesses credit and makes all efforts to mitigate risks, including choosing well managed firms, it lends to countries deliberately taking on risks that other purely private borrowers may not take.
“When we provide a loan or when we invest into equity, we need to make sure that, basically, the level of financial risk that we are taking is compatible with our own economic model,” says Djalal Khimdjee, Deputy Chief Executive of Proparco.
“The NPL globally for us, I would say it depends. We are today in the range of 5 percent to 7 percent, which is relatively significant. But again, for us, it’s a deliberate strategy to have those levels around 7 percent, because we are a development finance institution.”
Conflicts, such as in Ukraine, or crises are what drive up the average.
Proparco provides about 2.5 billion dollars of annual financing, some of which goes into funds that disburse to smaller ultimate recipients.
Around 20 to 30 percent go into infrastructure, and the rest into manufacturing and services.
Out of commitments of 2.8 billion euros in 2024, about a third went into climate related projects.
Out of a portfolio of 9 billion euros, about 6.5 billion euros was debt and around 1.7 billion euros was equity.
Lending to Asia was around 15 percent of the total, or a little under a billion euros.
RELATED :
France’s AFD keen on pumped storage plants as Sri Lanka eyes funding
France starting talks with Sri Lanka to resume projects after default ends
Under France’s Indo Pacific strategy, Asia is now becoming a focus area for the AFD group, officials said. (Paris/Sep21/2025)
Continue Reading